The annual deadline for filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (commonly known as the “FBAR” form) is fast approaching. Any U.S. taxpayer with a financial interest in, or signature or other authority over, a foreign financial account (which includes bank, security and other types of financial accounts) is required to file the FBAR form if the aggregate value of the account (or accounts) exceeds $10,000 at any time during the 2011 calendar year, subject to certain exceptions. The FBAR filing deadline for this year is Friday, June 29, 2012. No extensions of time to file the FBAR are available and it is considered timely filed only when it is actually received by the Treasury Department, and not when it is mailed. Significant criminal and civil penalties may be imposed for the failure to timely file an FBAR.

In related news, earlier this year, the Internal Revenue Service unveiled its 2012 Offshore Voluntary Disclosure Program, a third amnesty program designed to encourage U.S. taxpayers with undisclosed foreign bank accounts to come into compliance with U.S. tax laws and avoid criminal prosecution. This new program permits eligible taxpayers with undisclosed foreign bank accounts, and unreported income associated with those accounts, to obtain amnesty from criminal prosecution in return for the payment of back taxes, interest, and penalties. To date, more than 33,000 U.S. taxpayers have taken advantage of the prior offshore voluntary disclosure programs offered by the IRS since 2009. Currently, there is no deadline for participation in the 2012 program, although the IRS has stated that it could end the program, or modify its terms, at any time.

In addition, the Foreign Account Tax Compliance Act (“FATCA”) now requires individuals to report certain foreign assets (including certain foreign bank accounts, stock, securities, financial instruments and contracts) on a new Form 8938, Statement of Specified Foreign Financial Assets, if the total value of those assets exceeds certain specified thresholds. Form 8938 must be filed annually with an individual’s tax returns starting with the 2011 tax year and, importantly, the filing of Form 8938 does not relieve a taxpayer of its FBAR filing obligations. To address many of the questions raised by practitioners regarding the new reporting requirements, the IRS released Basic Questions and Answers on Form 8938 in February 2012 and supplemented those FAQs earlier this month. The FAQs provide guidance to taxpayers and practitioners in certain commonly encountered situations.

Individuals with questions about FBAR or FATCA reporting, or who are considering making a voluntary disclosure to the IRS regarding foreign financial accounts, should consult experienced tax counsel to understand the benefits and risks of the voluntary disclosure process.